MANAGEMENT BY OBJECTIVE(MBO)

K.BASKAR

MBA-DMS

PONDICHERRY UNIVERSITY

OBJECTIVE

• SOMETHING WE TRY TO ACHIEVE• INDIVIDUAL ACTIVITIES• SPECIFIC OR BROAD• LONG TERM OR SHORT TERM

NATURE OF OBJECTIVE

• OVERALL OBJECTIVES NEED TO BE SUPPORTED BY SUB OBJECTIVE

• HIERARCHY AND NETWORK FORM

Hierarchy model

MBO

• The term MBO was coined by Peter Drucker in 1954

• “MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner, consciously directed towards the effective achievement of organizational objectives.”

WHAT IS MBO?

We set goals and then performance is judged based on how well we accomplish these goals.Intellectually – this seems like the way to go – and has for yearsBut?

The goals must be:

• Mutually agreeable to employee and supervisor

• Demanding (stretching) but achievable• Within the control of the employee• Reviewed periodically for modifications

based on events

The goals must also be:

• Clearly defined• Simple to understand• Written

Process of MBO

1. Setting of organisational purpose & objectives.2. Key result areas.3. Setting subordinate objectives.4. Matching resources & objectives.5. Appraisal.6. Recycling. Aspects:-

• Objective setting.• Action planning.• Performance review.

BENEFITS OF MBO

1. Better management:- a) Clarity of objectives. b) Role clarity. c) Periodic feedback of performances. d) Participation by managers in the management process, and e) Realisation that there is always scope for improvement of performance in every situation.

BENEFITS OF MBO

2. Clarity in organisational action.

3. Personnel satisfaction.

4. Basis for organisational change.

PROBLEMS AND LIMITATIONS OF MBO

1. Difficulty of setting goals

2. Failure to teach MBO philosophy.

3. Problems in objective setting.

4. Emphasis on short-term objectives.

5. Inflexibility.

6. Frustration

THANK YOU